Thursday, May 10, 2018

Peter Schiff: Tariffs, Deficits, Fed Form 'Perfect Storm' Against Investors

Investment guru Peter Schiff is warning investors that a perfect storm is brewing as the nation’s central bank officials are clueless about how to deal with the future of interest rates in such a volatile trading landscape.

“We are in the perfect storm, I think, of massive explosion in deficits, not just the budget deficit but the trade deficit, these tariffs or a trade war is only going to compound the problem,” Schiff said on a recent podcast.

“We've got the economy weakening. We've got the dollar teetering on the brink of collapse. We've got gold about to break out and the bond market is in the same thing," the CEO and chief global strategist of Euro Pacific Capital Inc. said.

The Federal Reserve is not going to be able to deliver the rate hikes it is predicting, he cautions. “It's the expectation of more rate hikes that is what is keeping the lid on the price of gold. But it's only a matter of time before the market blows the lid off and the price of gold goes up," he warned.

He said not to be fooled by any recent headlines proclaiming the economy is actually robust.

“Q1 had all the hype in it, all the anticipation of the tax cuts, the big build in inventories. Despite all that, we're barely getting any growth in Q1 and because I think we had to pull growth forward from Q2 in order to get a pathetic 1.9, or wherever it's going to be for Q1, then Q2 is going to be a lot lower because we've pulled that growth forward,” he said/

“And that just blows up this whole bullish scenario of 4 or 5% economic growth," he said.

To be sure, “robust” business borrowing, rising consumer spending, and tight labor markets indicate the U.S. economy remains on track for continued growth, the Federal Reserve reported on Wednesday, with the risks of a global trade war the one big outlier, Reuters reported.

In its periodic “Beige Book” summary of contacts with businesses in its 12 regional districts, the Fed said the overall outlook among businesses “remained positive,” but that many were worried about the Trump administration’s use of tariffs.

- Source, NewsMax